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Study: Medicaid expansion is cheap for states

States would see their Medicaid spending rise by about 0.3 percent, or roughly $8 billion, if they took part in the Medicaid expansion, Kaiser said. The federal government, by comparison, would see its costs jump by 12 percent — about $800 billion — if every state took part in the expansion.

The federal government will pays for 100 percent of the expansion in the first few years, then its share begins to drop but remains above 90 percent. The Obama administration has touted that free money as a reason for states to accept the expansion — especially now, before federal payments begin to decline. States can drop out at any time.

In fact, eight states could actually see a decrease in their overall Medicaid spending if they implement the Medicaid expansion, Kaiser said. Those states — Connecticut, Delaware, Iowa, Massachusetts, Maryland, Maine, New York and Vermont — had already expanded their Medicaid eligibility before the Affordable Care Act took effect, and would therefore get extra federal funding for coverage that is already in place.

The healthcare law initially envisioned every states expanding its Medicaid program to cover people at or below 133 percent of the federal poverty line. But the Supreme Court said states must have the ability to opt out of the expansion if they want to.

If every state implemented the expansion, about 21.3 million uninsured people would gain coverage, Kaiser said.